The Future of Tipping

Tipping has reached a tipping point in America. But so far it’s unclear where it’s going.

Each state decides its own minimum wage and most (43) have lower minimum wage levels for workers in tipped jobs than other workers. That means restaurant service staff lives depend on tips. In New York, for example, the minimum wage for tipped workers is $5. For non-tipped workers, it’s $9. Some tipped workers make as little as $2.13 per hour.

Coming out on the no-tip side, influential restaurateur and hospitality maven Danny Meyer announced last week that he is ridding his 13 restaurants of tipping next year, promising to pay his 1,800 employees a living wage without being at the mercy of a diner’s whims at the end of the evening. There is a no-tipping, livable-wage advocacy group, which reminds us that most tip-dependent workers are in lower-priced restaurants, not tony New York City establishments like Meyer’s, and are subject to harassment by customers. Most are women, and many live below the poverty line. Tipping is basically like having scores of unregulated bosses walk in off the street every day, deciding whether you get paid.

On the pro-tip side are many restaurateurs arguing that raising salaries means raising prices, which scares away customers in a business that already has small profit margins. Most are small businesspeople who would love to have Meyer’s devoted clientele willing to pay $118 for a four-course menu (truffles and caviar will cost you $35 extra apiece), stellar reviews, and great locations (one is located inside of the Museum of Modern Art). Which is not to downplay Meyer’s move, particularly because he is known as a hospitality trend-setter and gold-standard. In a year when restaurants are bifurcating into fast-casual and ultra-fine dining as quickly as American citizens are dividing into haves and have-nots, raising base prices at, say, iHop, may make dining out of reach for many American families.

Confusing the whole issue for the consumer are the recently ubiquitous “tip jars” in casual or fast casual settings where many of the workers do not receive a lower, tip-dependent wage—in grab-and-go coffee shops and, bafflingly, serve-yourself frozen yogurt shops. Now that credit cards are even used for small purchases, a receipt with a blank tip line is pushed at customers for  a $1.50 bag of potato chips. So there is an undercurrent of tip exhaustion—even if the two situations are completely different.

The many sides found a meeting place for conversation this week at The James Beard Foundation Food Conference in New York City where the group, known for rewarding and celebrating the restaurant industry, boldly and counterintuitively gave its Leadership Award to Saru Jayaraman, a leader of the no-tip movement.

“The fact that the industry is listening is historic,” she said in her remarks. “When we win, it will be a better industry for everyone.”

Jayaraman’s fair-wage, no-tipping advocacy organization, ROC United, is working on a One Fair Wage bill in New York and other states that would eliminate the two-tiered wage systems that allow a lower minimum wage for tipped workers than for all other types of workers. After Meyer’s announcement last week, Jayaraman, wrote an opinion piece in The New York Times on tipping’s historic basis in slavery (people not wanting to pay freed slaves, so instead giving them tips out of their self-aggrandizing gracious generosity) and why labor unions dropped the one-wage fight as part of the federal New Deal during the Depression.

It’s worth a read, particularly for this fact supporting her argument—53 percent of our country’s tipped workers are minorities. The Times followed up with an editorial in support of one wage for all workers.

The point is well taken: Laws create tipping customs. Tipping 20 percent isn’t customary in Europe because restaurant workers receive a wage that doesn’t rely on customers’ whims. (But some customers choose to leave a token for great service.) We tip 20 percent in the United States because 43 states have far lower minimum-wage amounts for tipped workers.

Until the laws change to create “a truly sustainable restaurant industry,” Jayaraman introduced the James Beard Food Conference audience to an app that rates restaurants on the wages and benefits they provide workers. She told a story about receiving a letter from a New York Times reader about her concern for the broken food system that may well sum up what many have been thinking: “All this time I’ve been thinking about the pigs and the cows; I didn’t think about the people.”

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Continuing the Discussion

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